Debt has become one of the most insidious issues of daily life, growing in the shadows, but dictating much of our everyday life. According to Value Penguin’s 2017 analysis of American debt, the debt of an average American household is roughly $5,700. The total US consumer debt is $2.9 billion; total revolving debt sits at $1,002 billion. And 38% of households hold some kind of debt, be it credit card or outstanding student debt. Guidance on how to manage finances requires a keen helping hand. Proper financial guidance often results in one of two options: either you shell out thousands of dollars per year for a Wall Street advisor with strong industry affiliation or history, or you try your luck with one of the free financial startups that are bursting onto the scene using a surprising method: chatbots.
Both options might seem like a bit of a “pick your poison” situation. Traditional financial advisors know what they’re talking about, but they can be expensive ventures in their own right, and the more reasonably priced ones can often seem behind on the technology required to track your investments independently. And chatbots? Well, in terms of personal advice, it doesn’t get less personalized than a chatbot.
The Perfect Blend
Now, the new startup Grove is attempting to provide a new solution that sits right in between those two options. For roughly $600 a year, the company will pair users up with real-life certified financial advisors who will give them personalized financial advice, fusing the efficiency of tech with the intimacy and accuracy of peer-to-peer communication.
Once a user is paired with a Certified Financial Planner, the planner will review their current financial status and conduct a list of long-term and short-term goals to move forward. The advisor will design specific plans and systems based on the user’s financial situation, and make recommendations for that user, such as using one’s savings to pay off student loans ahead of schedule to avoid the accruing of interest. This is a move that might, on paper, seem like a financial drain, but through careful advising, has more long-term value than letting interest build.
The Grove interface allows users to track their goals and progress by pinning them to their ‘dashboard,’ which brings together a social media feed-like quality to the overwhelming world of financial advisory. Advisors are available anytime a user needs to check in with them, and the service will send you automated reminders to stay on track, maintain deadlines and keep the goals in mind in order to complete tasks you’ve set up with your advisor.
Startups Bridging the Gap
Grove was founded by Chris Hutchins, a partner at Google Ventures, who helped amass $2.1 million in a seed round led by industry titans like First Round, Box Group, SV Angel and others. What makes the Grove so uniquely equipped to bridge the gap between old-school financial advising and modern digital-based software is the way in which it combines many different financial services in one. By doing this, Grove gives a more quantitative look at how users use their money and how they save.
The company’s business plan also includes its own investment service, allowing advisors to manage a user’s investments more seamlessly. Users who stick with Grove for a while may be wooed by a more unified investment portfolio, but the company’s main revenue source won’t be dependent on it. According to Hutchins, the company will run largely on the yearly subscription service, meaning that it won’t be leaning on referral fees from third-party financial products that they push their users towards, or by forcing them to sign up for additional features, such as the in-house investment service. By keeping things focused on simplifying the convoluted advisory process, Grove is hoping that brand loyalty will push for word of mouth, and give people a new way to view an age-old issue. Debt is an all-consuming problem for much of the country, but it doesn’t need to be unsolvable, unstoppable or unmanageable.
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